There is a large population of mortgage debtors in the United States. When purchasing or refinancing a home, consumers typically obtain a long-term loan from a bank or other lender. The home and often the land on which the home stands serve as collateral for the loan. The consumer, in obtaining the loan, gives the bank a lien against the property. Thus, if the consumer does not pay as scheduled, the bank can foreclose on the home.
Because home mortgages are such large loans, consumers often pay the loan in 15 or 30 years. Monthly payments slowly decrease the amount owed on the mortgage. Nevertheless, the interest on the principal accumulates over the years. As a result, consumers have a high priority to pay the loan as quickly as possible, eliminating the risk of foreclosure and minimizing the accrued interest.
Along with mortgages, many consumers utilize transaction cards, such as credit cards, to manage finances and debt. Many conventional credit cards or other financial transaction devices provide incentives to consumers to encourage use of their cards over other transaction cards or other forms of exchange. Typically, this involves using a credit card where the consumer is awarded one free frequent flier mile with a particular airline for every dollar he or she charges on his or her credit card. By receiving frequent flier miles, consumers are given an incentive to use a particular credit card over other credit cards, money, checks, and automated bank cards. Similar incentive programs include receiving points or dollars towards the purchase of merchandise or services, such as automobiles, electronic equipment, music CDs, and phone service.
Other conventional credit cards offer a cash-back rebate. For example, one credit card issuer has a dividend product that provides one percent cash-back to the consumers on their purchases. Other credit cards provide a cash rebate to consumers of between one and five percent. Typically, the five percent cash-back rebate is limited to certain categories of purchases or revolving balances. The cash back is given directly to the consumer. However, most credit cards require consumers to earn a specified amount of a rebate before actually receiving the rebate. Additionally, there is usually a maximum limit, i.e., a cap, to the amount consumers can receive as a rebate.
No credit card provides a rebate that assists consumers in paying their mortgage. Further, no credit card has a rebate without a cap that applies the rebate directly to a mortgage. There is a current need for a credit card that caters to mortgage debtors.